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Why Is There Uncertainty about COVID-19 Health Insurance Coverage?

Den Bishop
Den Bishop
Senior Advisor

The government and insurance companies have vowed to pick up much of the tab for coronavirus testing and treatment. But in an article titled “Got coronavirus? You may get a surprise medical bill, too,” insurance experts, doctors, and healthcare economists say that because of the fragmented nature of the U.S. healthcare system, they’re already seeing holes in this impromptu safety net.

Here is a direct paragraph from the article: “Even in normal times, they say, doctors and hospitals have to navigate dozens of health care plans, public and private. Now all those plans are changing their policies to address the coronavirus, and the providers — the ones who compute the cost of your care — struggle to keep up, leading to surprise bills even after promises that costs would be waived.”

But, why is this?

  • Insurance companies have a financial motivation to cover COVID-19 costs.
  • Medical providers have a financial motivation to get reimbursed for COVID-19 costs.
  • Patients have a financial motivation to have the COVID-19 costs covered by insurance.

So, why is there uncertainty about COVID-19 health insurance coverage?

Health Insurance Companies Don’t Benefit from Denying COVID-19 Care

The Affordable Care Act (ACA) mandated that health insurance companies spend a specific percentage of every dollar of premium in claim reimbursements. If reimbursements don’t meet or exceed the target, the health insurance company must refund the difference to participants.

Insurance companies don’t want to reimburse members after the plan year has closed. Additionally, the elimination of elective procedures is pulling insurance company loss ratios below these reimbursement targets. This means health insurance companies actually want to pay more claims this year!

So, Why Are There Problems with COVID-19 Health Insurance Coverage?

When we really take a closer look at what’s going on, there are two key problems.

Problem 1: Self-insurance

More Americans are covered by self-insured health plans through their employer than through insured plans. This means the health claims are actually paid by the employer.

The employer is really the health insurance company, because they’re taking the financial risk. The traditional insurance company is simply an administrator. Most employers have taken a hit to their profits because of COVID-19, and accelerating health claim payments doesn’t align with their business interest.

Problem 2: Surprise bills

It is the amount of the bill that’s a surprise. In-network claims have a contracted reimbursement rate. Some medical providers refuse to accept negotiated health insurance reimbursements.

Out-of-network claim guarantees with no financial protection expose the health plan to price gauging. We need to protect patients, but price gauging in COVID-19 should be illegal for anything…including health services.

Health Insurance Is Complex

As we’ve continually said, the cost and complexity of our nation’s healthcare system is only contributing to the problem. My guess is the pandemic will inevitably reshape the country’s healthcare system, but only time will tell. Until that point, the confusion will continue and so will the uncertainty about coverage.

Holmes Murphy is working every day to keep you up to date during this pandemic with our COVID-19 Resource Center. We are here to help you through this time.

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